Outsourcing in Eastern Europe

Outsourcing in Eastern Europe

Based in Ukraine and Belarus, Ciklum offers Western companies a model of software development outsourcing that allows them to remain masters of their projects.

"The traditional way of outsourcing application development projects is unsatisfactory, this in spite of ITIL, specifications and agreements on service levels," says Torben Majgaard, founder and director of Ciklum, an IT outsourcing firm based in Ukraine which clearly has the wind in its sails. "The reason is simple: customer and supplier have conflicting interests: the supplier will always want to carry out the project at the lowest possible cost, which is with the least expensive specialists.”

When, in traditional outsourcing, customers give a mandate to develop a certain software, they generally communicate exclusively with the representatives of the contractor and are not directly involved in the project or with the development team. In return, they get a product that does or does not satisfy them. Not with Ciklum! This company offers its Western customers the best specialists in the area, infrastructure, methodology, processes, guidance, but leaves them with the full control of their projects. It is left to the client to form their team with the available people and to put their skills to work to develop the desired software under their own responsibility. Apparently the formula hits the bull’s eye! Ciklum’s offices, in constant expansion, are packed with teams of local experts working on projects for Western clients. Each team has assigned premises, in some cases specifically designed, bearing the name of the customer or the project. Our visit to the development center in Kiev has allowed us to meet with representatives of several Western companies, including from the French-speaking part of Switzerland, there to test the waters for possible outsourcing projects.

Availability of specialists

Torben Majgaard summarizes in the following way the assets of countries such as Ukraine and Belarus in the area of software development outsourcing: “Specialists in all areas abound and training is excellent. Approximately 20,000 IT professionals graduate from school each year, 14,000 with a Master. And these people are not allowed to work in the European Union. On the other hand wages and living costs are much lower than in the West. A specialist costs here, including the margin taken by Ciklum, roughly half of what they cost in the EU. But the net income earned by that person ensures them a standard of living higher than that of their Western colleagues. We also have two big advantages over our competitors from Asia: the geographic proximity (Kiev is two hours by plane from Switzerland) and the cultural proximity. No visa is required, communications are excellent and the business language is English. More than 900 companies are active here in this sector, 4 or 5 large ones including Ciklum. They generate a turnover of almost one billion dollars with a growth of 20% per year. In addition, the city of Kiev has much to offer. Of Danish origin, Majgaard now likes it better there with wife and children than in his home country.

Much like Google

Set in an ultramodern twenty-story building in the center of the Ukrainian capital, overlooking the Dnieper and the golden domes of the numerous Orthodox churches of the city, the Ciklum offices have a distinct Silicon Valley look and feel. "Google is our model to follow, both with regard to the office layout and the spirit that must prevail," Ivan Pohrebniyak, director of marketing, told us. Meeting rooms equipped with videoconferencing abound on every floor, as well as places to eat and relax. "Initially, clients often want to "shut away" their teams on the premises reserved for them," added Pohrebniyak. "But, in general, things quickly change, doors open and horizontal communication sets in. As long as the necessary discretion is observed, these discussions between specialists are an essential element of performance. A basic principle is respected, however: a specialist never shares his time between different clients. "

Ciklum has development centers in several Ukrainian cities, as well as in Belarus. It has 130 clients and employs 1,000 persons. In 2010, it achieved a turnover of $ 33 million and plans to almost double this value in 2011. Its customers are mainly located in Scandinavia, the Netherlands, Great Britain, Germany, Switzerland and Austria. In our country, the company has an office in Zurich led by Franco Dal Molin.

Coaching individuals and teams

The providing of specialists being its core business, Ciklum obviously depends heavily on its human resources department which works like a real employment agency. HR is in fact responsible for finding the right people suggested to the customers for building their teams, aware that this choice will often determine the success of the project. Ciklum however also has its own consultants who help clients start their projects, assist the teams and act to quickly detect potential problems and eliminate them. A monitoring tool is used at regular intervals to measure performance, stimulating competition between the teams. If, finally, a customer prefers not to or does not have the means to ensure the realization of their project, Ciklum can do it for them and has some teams dedicated to this activity. But this activity will always remain the exception here.

© Copyright 2011 by Jean-Luc Perrenoud, Market.ch.

The above article is the translation provided by Market.ch of the original one written and published in French language. The original article’s scanned version is available for download below.